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Tanzania Tourism Could Hit U.S. $16 Billion

"To realize this opportunity, the government should simplify its system of taxes and fees and make its revenue allocations more transparent as there is no doubt Tanzania is in a good place with tourism and yet could do considerably better well recognized internationally," Philippe Dongier, the Country Director for Tanzania, Burundi and Uganda said.

Tourism is already a major contributor to Tanzania's economy, however, as the latest Tanzania Economic Update published by the World Bank argues, this strategic industry can grow and create more high-paying jobs, and closer linkages with businesses and local communities.

Dongier said the country received one million visitors in 2013 bringing in $1.5 billion in foreign exchange earnings. He said this is remarkable by any account. But there is potential for further growth after some much needed reforms are implemented.

According to Dongier, tourism directly employs close to half a million Tanzanians and contributes to almost 20% of total exports, represents approximately 3.4% of Tanzania's total GDP but the level could reach an estimated 10% when considering its indirect impacts on other areas such as agriculture and transportation.

The latest update proposes three strategic directions. The first is to diversify tourism activities from the current emphasis on high end tourism in the north around Arusha and Zanzibar where up to 90% of tourism activities are currently concentrated.

According to Morisset the report recommends realizing other opportunities, especially in the South, and developing attractions and activities that cater to tourists on more modest travel budgets, including more local and regional visitors.

The second direction is to further integrate local communities and small operators into tourism activities, through benefit-sharing processes while such efforts already exist in Tanzania, they are still at a small scale and have had limited impact on the ground.

According to the report that was launched last week in Dar es Salaam, best practices where training and linkages programs developed jointly by the private and public sectors have brought about higher quality standards while also increasing the participation of the local business community and workers in tourism activities.

Apart from the discussion of Tanzania's tourism as the special focus of this edition of the Tanzania Economic Update, the publication analyses the state of the economy. The recent rebasing of the GDP and the latest household budget survey have challenged the traditional view of the Tanzanian economy.

The country's income per capita, at $950, is now closer than before to reaching middle income status and the poverty rate declined from 33 percent 2007 to 28 percent in 2012. Meanwhile, the economy continued to expand by around seven percent in 2014 with controlled inflation averaging five percent.

"The main vulnerability of Tanzania's macroeconomic management remains its fiscal policy, and it is imperative for the Government to rectify this situation," says Morisset.

While the Government appears ready to take the necessary actions to address these risks, the report warns there is no room for complacency when the country is gearing up for a national referendum in April 2015 on the proposed new constitution and general elections in October 2015.